Changes from report parliamentary committee draft to plenary report

Added(a) the appropriateness of the associated risk parameters referred to in Part Three, Title II, Chapter 3 and 4;

Added(b) an analysis of the effective and observed riskiness of credit risk exposures where a credit insurance was recognised as a credit risk mitigation technique;

Added(c) the consistency of own funds requirements laid down in this Regulation with the outcomes of the analysis under points (a) and (b) of this paragraph.

AddedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal, to amend the treatment applicable to credit insurance referred to in Part Three, Title II.

Added____________________

Added* Council Regulation (EC) No 834/2007 of 28 June 2007 on organic production and labelling of organic products and repealing Regulation (EEC) No 2092/91 (OJ L 189, 20.7.2007, p. 1).’;

Added(204) the following Article 506c is inserted:

Added‘Article 506c Credit risk – interaction between Common equity Tier 1 reductions and credit risk parameters

AddedBy 31 December 2026, EBA shall report to the Commission on the consistency between the current measurement of credit risk and the individual credit risk parameters and on the treatment of any adjustments for the purpose of the computation of the IRB shortfall or excess as referred to in Article 159, and on its consistency with the determination of the exposure value in accordance with Article 166 of this Regulation and with the LGD estimation. The report shall consider the maximum possible economic loss arising from a default event along with its achieved coverage in terms of Common equity Tier 1 capital reductions, taking into account any accounting-based Common equity Tier 1 capital reductions, including from expected credit losses or fair value adjustments, and any discounts on received exposures, and their implications for regulatory deductions.’;

Added(204a) the following Articles are inserted:

Added‘Article 506ca

AddedPrudential treatment of securitisation

AddedBy 31 December 2025, EBA, in close collaboration with ESMA, shall report to the Commission on the prudential treatment of securitisation transactions, differentiating between different types of securitisation, including synthetic securitisation. In particular, the EBA shall assess the extent to which the application of the output floor to securitisation exposures would affect the capital reduction obtained by originating banks in transactions for which a significant risk transfer has been recognized, would excessively reduce the risk-sensitivity and would affect the economic viability of new transactions. In such cases, of a reduction of risk sensitivities, the EBA may consider proposing a downward recalibration of the non- neutrality factors for transaction for which a significant risk transfer has been recognised.

AddedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2026.’;

AddedPrudential treatment of securities financing transactions

AddedBy 31 December 2025, EBA, in close collaboration with ESMA, shall report to the Commission on the impact of the new framework for securities financing transactions in terms of capital requirements. EBA shall assess whether a recalibration of the associated risk weights in the Standardised Approach is appropriate, given the associated risks with respect to short term maturities, specifically for residual maturities below one year.

AddedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by 31 December 2027.’;

Added(204b) the following Article is inserted:

Added‘Article 518c

AddedReview of the application of the output floor

Added1. By 31 December 2027 the EBA shall assess, and issue an opinion on, the level of compliance with Article 92-a(2) in light of potential financial stability concerns and the developments in the banking union, as regards a more uniform degree of deposit insurance coverage across Member States and the pooling of resources at Union level.

Added2. Upon the EBA’s publishing the opinion referred to in paragraph 1, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal to amend the level of application set out in Article 92-a(1) of this Regulation, taking into consideration the opinion referred to in paragraph 1 of this Article.’;

Added(205) the following Articles 519c and 519d are inserted:

Added‘Article 519c Minimum haircut floors framework for SFTs

AddedEBA, in close cooperation with ESMA, shall, by [OP please insert the date = 12 months after entry into force of this Regulation], report to the Commission on the appropriateness of implementing in Union law the minimum haircut floors framework applicable to SFTs to address the potential build-up of leverage outside the banking sector.

AddedThe report referred to in the first sub-paragraph shall consider all of the following:

Added(a) the degree of leverage outside the banking system in the Union and to which extent the minimum haircut floors framework could reduce that leverage if that leverage would become excessive;

Added(b) the materiality of the SFTs held by EU institutions and subject to the minimum haircut floors framework, including the breakdown of those SFTs which do not comply with the minimum haircut floors;

Added(c) the estimated impact of the minimum haircut floors framework for EU institutions under the two implementation approaches recommended by the FSB that is a market regulation or a more punitive own funds requirement under this Regulation, under a scenario under which EU institutions would not adjust the haircuts of their SFTs to comply with the minimum haircut floors and an alternative scenario under which they would adjust those haircuts to comply with the minimum haircut floors;

Added(d) the main drivers behind those estimated impacts, as well as potential unintended consequences of introducing the minimum haircut floors framework on the functioning of the EU SFT markets;

Added(e) the implementation approach that would be the most effective to meet the regulatory objectives of the minimum haircut floor framework, in light of the considerations laid down in points (a) to (d) and taking into account the level playing field across the financial sector in the Union.

AddedOn the basis of that report and taking due account of the FSB recommendation to implement the minimum haircut floors framework applicable to SFTs, as well as the related internationally agreed standards developed by the BCBS, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by [OP please insert the date = 24 months after entry into force of this Regulation].

AddedBy [OP please insert the date = 24 months after date of application of Part Three, Title III], the EBA shall report to the Commission on all of the following:

Added(a) the use of insurance in the context of the calculation of the own funds requirements for operational risk;

Added(b) whether the recognition of insurance recoveries may allow for regulatory arbitrage by reducing the annual operational risk loss without a commensurate reduction in the actual operational loss exposure;

Added(c) whether the recognition of insurance recoveries has a different impact on the appropriate coverage of recurring losses and of potential tail losses, respectively.

Added(ca) the availability and quality of data used by institutions when calculating their own funds requirements for operational risk.

AddedOn the basis of that report, the Commission shall, where appropriate, submit to the European Parliament and to the Council a legislative proposal by [OP please insert the date = 36 months after date of application of Part Three, Title III].’;

Added(205a) the following Article is inserted:

Added‘Article 519da

AddedProportionality

AddedEBA shall prepare a report assessing options to introduce in the prudential framework specific prudential, governance and transparency requirements for small and non-complex institutions with a view to increase the proportionality of the prudential framework, including:

Added(a) the relevance of small and non-complex institutions at institution level and by region for maintaining financial stability;

Added(b) if appropriate, recommendations as to how the prudential framework can better reflect the differing degrees of financial stability relevance of categories of small and non-complex institutions.

AddedEBA shall report its findings to the Commission by 31 December 2027.’; (206) Annex I is replaced by the Annex to this Regulation.

AddedEntry into force and date of application

Added1. This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Added2. This Regulation shall apply from 1 January 2025, with the following exceptions:

Added(a) the provisions in points (1)(a), (b) and(c), (e) to (h), (j), (u), (v) and (x) concerning certain definitions, the provisions in point (6) concerning the scope of prudential consolidation as well as the provisions in points (8), (10) to (12), and (14) to (23) concerning own funds and eligible liabilities, which shall apply from [OP please insert date = 6 months after date of entry into force of this Regulation];

Added(b) the provisions in points (1)(d) and (4) concerning amendments in accordance with Regulation (EU) 2019/2033, and the provisions in point (47) concerning to the treatment of exposures in default, which shall apply from the date of entry into force of this Regulation;

Added(c) the provisions in points (9), (26)(a), (27), (28)(a), (29), (34), (41), (42), (44), (47), (54), (59)(c) (60)(c), (61)(g) and (h), (64)(c), 66(d), (69), (81), (85)(b), (90)(c), (91)(c), (92)(c), (131), (132)(b), (136)(d), (153), (154)(d), (155)(c), (156)(b), (166)(c), (169), (178), (182), (183), (189), (192), (194), (196), (199), (201) to (205) that require European Supervisory Authorities or the ESRB to submit to the Commission draft regulatory or implementing technical standards and reports, the provisions that require the Commission to produce reports, the provisions that empower the Commission to adopt delegated acts or implementing acts, the provisions on review and the provisions that require the European Supervisory Authorities to issue guidelines, which shall apply from the date of entry into force of this Regulation.

Added3. In Article 3 of Regulation (EU) 2019/876, paragraph 6 is replaced by the following:

Added6. Point (53), as regards Article 104a of Regulation (EU) No 575/2013, and points (55) and (69) of Article 1 of this Regulation, containing the provisions on the introduction of the new own funds requirements for market risk, shall apply from 1 January 2025.

AddedThis Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaties.

AddedDone at Brussels,

AddedFor the European Parliament For the Council

AddedThe President The President

AddedClassification of Off-Balance Sheet Items